A tangible sign that the issue of income inequality is taking hold in the American psyche: Tyler Cowen has made a patently ridiculous effort to try to change the topic , and Megan McArdle is dutifully amplifying it (aside: par for the course, McArdle has a remarkably uninformed discussion of thyroid treatment at the top of her short piece. I won’t waste reader time with a discussion, but suffice it to say I have personal experience with the exact symptom pattern she describes, and she’s misrepresenting both the diagnostic approach and endocrinologists’ responses).
Cowen’s contribution falls into the category of agnotology, which is “culturally induced ignorance,” or to put it in crasser terms, consciously seeking to make people stupider. His argument:
I get uneasy when I read sentences such as “inequality caused X.” “Inequality” didn’t cause anything. Inequality is a statistical residue of some other actual processes. It is better to say what caused X (say “the rage and poverty of inner city residents”) and, if relevant, connect this to inequality as well. Except that the cyclically adjusted deficit is an even more problematic causal concept than “inequality” because it relies on measurement of a modal, namely potential output.
This is actually not trivial to unpack. Cowen is basically arguing that because inequality is defined and measured statistically, it is not a real phenomenon of its own, but results from something else, ergo, we should go after the “something else”. But that’s a false causal chain. If we accept his logic, no statistically measured phenomenon should be examined on its face. That’s patently ridiculous. Tail risk in financial markets is a statistically defined phenomenon too. No one would suggest it is either feasible or possible to decompose all the causes; Mandelbrot would laugh him out of the